On July 12, South Korea’s ruling party, the People’s Power Party, officially proposed delaying the country’s tax on crypto trading profits. The party noted that current sentiment towards crypto assets was deteriorating and stated that imposing taxes on virtual assets quickly is “not advisable at this time.”
The proposal argued that with higher risks in crypto compared to stocks, investors might leave the market if income tax is imposed on crypto gains. Originally, the crypto gains tax was set to start on January 1, 2025. If approved, the tax implementation will be postponed to January 1, 2028.
Election Campaign Promise
As part of their campaign for South Korea’s general elections in April, the People’s Power Party promised to delay the crypto gains tax by two years. On February 19, the party stressed the need for a general crypto framework before starting taxation. They believe taxing crypto should only happen once a proper system is established.
A representative highlighted that unlike the stock exchange, no entities oversee crypto transactions. The party believes it is necessary to spend two years developing a regulatory system for crypto.
South Korea’s History of Delayed Implementation
Local media, The Korea Economic Daily, noted that the plan to tax crypto gains was initially set for 2021. Due to backlash from industry leaders and stakeholders, the government postponed it to 2023, and then again to January 1, 2025, to protect investor interests. If the new proposal passes, the crypto gains tax will be delayed by nearly seven years from its original schedule.
In South Korea, investors must pay a 20% capital gains tax if their annual gains exceed 2.5 million won (approximately $1,800). This threshold is much lower than for stocks, where only gains exceeding 50 million won (about $36,000) are taxed.
